2.7 Key Terms
Key Terms
- Business Strategy entails establishing long-term goals and outlining a course of action for a firm, differentiating it from the day-to-day operational activities.
- Business-level Strategy Here, the focus narrows to individual business units (SBUs) within a diversified corporation.
- Competitive Advantage is what makes a business stand out from its competitors.
- Competitiveness refers to a firm’s ability and performance in selling and supplying goods and services within a given market (“Competition (companies)”, 2019).
- Core Competencies are the resources and capabilities that comprise the strategic advantages of a business.
- Corporate Strategy is a broader scope vision that defines the company’s core values, mission, and desired competitive advantage.
- Functional Strategies are department-specific plans that support the overall business-level strategy.
- Inputs are typically measured in dollars spent, although exceptions exist (such as labour hours, water usage, or electricity consumption).
- ISO 9001: This internationally recognized standard provides a framework for establishing a quality management system, ensuring consistent product quality and adherence to customer specifications.
- Key Purchasing Criteria are the factors that influence a customer’s buying decision. These include price, quality, variety, and timeliness.
- Labour Productivity: This metric measures the output (goods or services produced) per unit of labour input (typically labour hours).
- Lean Production is a prominent methodology frequently employed in time-based strategies. Lean principles focus on eliminating waste in all its forms, from unnecessary production steps to excessive inventory levels.
- Machine Productivity: This metric focuses on the output produced per unit of machine time (e.g., number of widgets produced per hour of machine operation).
- Material Productivity: This metric measures the output per unit of material input (e.g., number of finished products per unit of raw material).
- Multifactor Productivity: This broader measure takes into account all inputs (labour, materials, machinery, etc.) to determine the overall efficiency of the production process.
- Operational Strategy: This highly focused level deals with day-to-day operational activities, such as scheduling production runs or setting quality control parameters.
- Output: For homogenous goods, output can be expressed as the number of units produced. However, when dealing with diverse products that vary in labour and material costs, the output is often described in terms of the dollar value of all goods produced within a specific time frame.
- Quality-based Strategies prioritize continuous improvement in product design and a relentless pursuit of error reduction.
- Six Sigma: This data-driven methodology focuses on identifying and eliminating defects in manufacturing and business processes, leading to significant improvements in quality and efficiency.
- Strategic Business Unit (SBU) is a semi-autonomous unit responsible for its own budgeting, product development, hiring, and pricing decisions. It operates as an internal profit center within the corporation.
- Time-based Strategies focus on reducing lead time, the time elapsed between a customer’s order and product delivery.
- Total Quality Management (TQM): A holistic approach to quality management, TQM emphasizes continuous improvement across all organizational levels, fostering a culture of quality that permeates every aspect of the business.
